Outperform LIVE! PROS Solutions in Action
This session provides an opportunity to see how various PROS Platform features including Real Time Pricing Engine, Smart Price Management, and Smart CPQ address key challenges across industries. Hear from a food manufacturer, a healthcare service provider, and two industrial distributors about the issues PROS is helping them solve and the results they are achieving.
Full Transcript
Please note that this transcript was generated by AI and may contain errors. We apologize for any inaccuracies.
Emcee: Good afternoon. Please welcome Director Strategic Consulting at PROS, Daniel Wolf.
Daniel Wolf: Welcome everybody, thank you for joining. I'm really excited to get to not only introduce, but participate in this Outperform Live where you're gonna be hearing directly from our customers, we're gonna be walking through their solutions, talking about how they interact with PROS, the value that they get from the PROS Solution. So really fantastic that we'll get to do that. We're gonna be combining a little bit of what we've heard from the last day and a half around Gen AI and digital experience and improving the relationship with the customer through technology, and also kind of combining that with what we've done in the Innovation Center and showing you guys the solutions. The Innovation Center is open till 2:00, I believe. So if you want to swing by and see a demo of any of the stuff you're seeing on the screen today, please, please swing by, we will be there. So without further ado, I will welcome to the stage Fonterra and they will help us kick off this first session....
Alistair Draper: So my name is Alistair Draper and I have 10 years experience working at Fonterra. And in my current role as Business Process Manager for Pricing and Trading, my responsibilities are around setting the future strategy and pricing roadmap for Fonterra, and with PROS, we have a strategic partnership where we have CPQ Smart Price Optimization, Smart Price Management, and this month we went live with the real-time pricing engine. So who is Fonterra? We are a dairy cooperative, owned and supplied by farming families across New Zealand, and we have been in the dairy industry since 1927. Through the spirit of cooperation and a can-do-attitude, Fonterra farmers, along with almost 18,000 employees around the world, share the goodness of our milk through innovative consumer food service and ingredient brands, where we deliver an annual revenue of 15 billion US dollars.
Alistair Draper: Fonterra is also responsible for approximately 30% of the world's global dairy exports, and we are committed to producing dairy nutrition in a way that cares for people, animals and the environment and brings value to our communities. New Zealand milk is the focus of our strategy, and our global presence helps us generate revenue in over 130 countries. Our range of dairy ingredients are sold under our NZMP brand, and are found in prominent food and nutrition brands around the world. So Fonterra's history with PROS. In 2011, Fonterra's partnership with PROS began when we implemented software, which is now known as Supply Aware Optimization, to help solve Fonterra's business problem of optimizing our collected milk into the highest returning product streams. And then in 2015, this extended into our ingredients channel of our business through the implementation of CPQ and price optimization, known internally as Smart Price.
Alistair Draper: This provided our sales teams with a single offer process and surface the price bill to them when they were offering to their customers. We then went further in 2018 when we in implemented price management and enhanced our CPQ tool to improve the experience of our account managers when they offered to our customers. This was a fundamental change for our business as we migrated all of our pricing master data from our ERP. This also enabled our business to be able to offer customers price risk management solutions through an integrated system rather than manual spreadsheets, which we had done previously. Then following COVID, like many businesses, we then faced a new business problem, and that was e-commerce.
Alistair Draper: We were predominantly an account managed business, and some of our customers were looking for a digital solution. So we built an online marketplace, and in 2023 we began the work to implement RTPE, which went live this year. The three key business challenges we were looking to solve were that our customers had a growing demand for e-commerce, but we had difficulty in supporting real-time pricing because our processes behind the scenes to enable our online marketplace required us to simulate prices and price management, and then put them through multiple transformations to then get them onto the online marketplace. This manual process and re-calculating prices meant that the end user experience was both suboptimal, but then there was the opportunity for pricing to be misaligned across the multiple selling channels.
Daniel Wolf: Awesome, thanks Alistair. So focus on real-time pricing, keyword there, real-time, improving the experience, and then really growing that e-commerce. And we started planning this out and talking about it, we decided to focus on this particular topic, so Alistair sent me over a screenshot of their actual solution, so this is what it looks like in their portal. He sent it over to me, it looks fantastic. You can browse for products, you can view your orders. You will notice on here that there is their product descriptions and when things are gonna arrive, and it also shows something key, it shows the price on there. So that's what we're trying to solve for today. Like Alistair mentioned, with smart price and smarter price, it was all around delivering that to the sales person, and now it's about delivering it direct to the customer. We should probably call it smartest price, if we're gonna keep going. I don't know what's gonna be after that, we will have to figure something else out.
Daniel Wolf: But yeah, really focusing on how we are gonna get that out there as quick as possible. So if we think about two other topics, it's where is this coming from, how are we getting the price recommendation, and ultimately, how do we utilize what you're doing already today to get that price recommendation out. So they're using optimization, they're using AI-powered optimization, like we have heard a lot about over the last couple of days, and ultimately that's driving the price recommendation, looking at customer willingness to pay, which attributes best describe this customer and influence the price that they should be willing to pay. And then ultimately getting that out to the sales person has been the focus through the last since 2015 or so, whenever you started with CPQ. So that kind of structure of getting the real price out was already there, but it was only to the sales person.
Daniel Wolf: So we understand everything about that customer, what should the price be, and then ultimately layering on some business rules. So whether it's availability of products or maybe some competitive intelligence or some business factors that you may know about that the data may not reflect yet, they have the ability to put all that in and it really built this price engine to send all of this information to the sales person. So if we introduce the real-time pricing for now the customer experience, we're utilizing the exact same thing, there is no more storage of these prices on to the e-commerce portal, you don't have to build it anywhere else, the infrastructure for the price was already there, the optimization was already there, the business rules are there, so we are using that same type of model to now call directly in real time for the e-commerce portal to say, ultimately what should the price be and do we show the same price?
Daniel Wolf: So when we were talking about it in preparation, one of the things that we said was, well, price consistency was one of the main things they were trying to solve for, but more so like price accuracy, 'cause it might not always be the exact same price. If you're trying to drive different behaviors through a different channel, you have the ability to do that now, we know where the price request is coming from, is it coming from sales, is it coming from an e-commerce portal? So if your focus is on the location of the customer and offering a particular discount or you're trying to drive them to the e-commerce channel because they are a certain type of customer and that's where you are trying to push their interaction with you guys, that's how they've been able to really overhaul this whole process and make it a lot faster by using the optimization, but really powering it through that, the real-time pricing engine.
Alistair Draper: So now that we have RTPE live within our business, whether a customer engages through an account manager or an online marketplace, as Daniel said, that price is now consistent across these selling channels. Another benefit for us is the time it takes to make price changes on the marketplace, and when we calculated it came to a 95% reduction in time, but also because we're not putting it through the multiple transformations, it's reducing the opportunity for errors. We also have with this reduction in time and the ability for our customers to self-serve on aspects of their business with us, we believe that moving forward we will also be able to improve our customer experience and our cost to serve with our customer base.
Daniel Wolf: Awesome. 95% reduction, that's awesome. When I was sitting through the awards before we did this, I was thinking, Alistair's got to get some sort of award, you are probably the furthest traveled person to get here, but I think you might have been beat with some of the airline people, but we really appreciate Fonterra's partnership over the years, it's been fantastic getting to work with them, great customer, helping us innovate, figure out new ways to solve their business challenges, and I really appreciate you guys coming and supporting us over the years. So thank you.
Alistair Draper: Thank you very much.
Daniel Wolf: So now we are gonna introduce the Spire Healthcare team to the stage, and they will go through their customer story as well.
Dominic O’Regan: Wow, it's nervy being here. The pricing and selling intelligence in this room, and you've got us. Well, you're intelligent, I'm less so, but...
[chuckle]
Olivier Nocher: Thank you.
Dominic O’Regan: The problem is, and I've got to be honest, when I get nervous, I start moving around and gesticulating, and there's an edge here, right?
Olivier Nocher: That's okay, I'll do it with you.
Dominic O’Regan: But if I fall and crack, I might need your help, right? I might need Spire. So in the UK, if I fall and I crack and I need a new hip or something like that, then, in the United Kingdom is lovely, right? Because the government says, "We love you, we're gonna look after you. We're gonna pick you up, we are gonna give you a cuddle. We're gonna... " Maybe not a cuddle, but they're gonna fix my hip, they're gonna do it and they're gonna do it for free, right? For free. They know nothing about pricing, but then they say, "Just sit down over here for a little while and we'll sort you out." It might be a little longer, maybe six months, maybe a year before I get my free hip replacement, so I just put my life on hold. That's it, right? So this is where Olivier and Spire Healthcare come in, so let's roll the video and see what the alternative might be.
[video playback]
Dominic O’Regan: It's really simple, right? So there's another reason why I'm feeling a little bit intimidated, because I've got to introduce Olivier, right? And he's taller than me, so I'm naturally automatically a little bit intimidated. But more to the point, look at his flipping job title, Group Commercial Intelligence and Pricing Director. You told me, "Just tell them I'm the Pricing Director," but I can't ignore that, right? I'm a Strategic Consultant at PROS, and it's the best job in PROS, but I think our job title could get just a little bit better, don't you? We could have intelligence, maybe?
Olivier Nocher: So full disclosure, that's a ChatGPT tittle, that's how I came up with it.
[laughter]
Dominic O’Regan: So what we're gonna learn about today is we're gonna see three things, really simple things, we're gonna see the scale, we're gonna see the efficiency, and we're gonna see the governance. And all of these things have been key to just one part of our journey together, and we've been working together four, five years maybe.
Olivier Nocher: Oh yeah, closing five years now.
Dominic O’Regan: Yeah. That's why I love the role at PROS, because I get to be involved with people like you right at the beginning when we're kind of thinking about and we've got a vision and then we go through all the process of getting there to the point where you and I are stood here going, "Ah." Right? Okay. So tell us a little bit about Spire and why these three things matter.
Olivier Nocher: So, I mean, thank you for the introduction. Yeah, so we are a healthcare company, so the services we provide is effectively, your diagnostics, your surgeries. We've also branched out into mental health support and occupational health. We are fully in the UK, we do not have any subsidiaries anywhere else in the world. We've got 37 hospitals, that's the core of our business, and we've got also 24 smaller clinics. In terms of revenue, we make... Well, we made last year 1.3 billion pounds, and of that 1.3 billion pounds, 340 million pound is managed using the PROS solutions, and that's what we're going to talk to you about.
Dominic O’Regan: Let's have a look at your journey.
Olivier Nocher: So yeah, journey. So we started just... Well, just in the pandemic, to be honest, and in July 28, 2020. And at the time, like so many of you were, I think I heard that story probably about 10 times this, over the last few days, what we had before PROS was spreadsheets, binders, post-it notes, and we decided to, well, not carry on doing that anymore. So we started with a journey, we selected PROS and we, in July 2020 and by September 2021, we were fully rolled out. And we were fully rolled on a portion of our services, which we called Inpatient and Day Case.
Olivier Nocher: I won't go into the definition, it doesn't matter, happy to explain afterwards. So, but that represented 22,000 price points, and we've been managing effectively those prices through Smart Price Optimization and selling through CPQ ever since. We achieved two new milestones recently. So on one side, now those 22,000 price points are optimized using Gen 4. So that's brand new. And we have also now added another 200,000 price points, which come from our outpatient side of our business. And that's, all of that is now managed within SPO & M.
Olivier Nocher: All right. So we had a huge challenges that we were trying to overcome at the time. So first one is, I mean, for some of you, you've got millions and millions of price points, but already 22,000 seemed like quite a lot for us. And it was very important that we had a solution that could allow us to control all those prices across our channels efficient... Well, like first control them, and also do that very efficiently. Up until last week, there were only four people in the pricing team. Now there are six, so it's not like we are 20 or anything like that. And the last thing is that when we started, we had absolutely no price governance whatsoever. So let alone traceability of our prices have changed, I'm also talking about how prices are approved. And so that was the third thing that we were hoping to overcome with using PROS solutions.
Dominic O’Regan: So scale, efficiency and governance. So we picked some screenshots. We've picked some elements of the system that kind of support the way you were able to empower and supercharge the process or whatever it is, but the scale that the PROS solution has helped you to achieve, some of the efficiency, some area of efficiency and how it's added to the governance perspective, right? So if we first look at the the scale aspect, right? So what you see here is a price list. It's the most exciting part of a pricing engine, right? A great big list of numbers, wow.
Dominic O’Regan: And what makes it even more brilliant is that with all of the different surgical procedures and everything else, and the hospitals and the list goes down somewhere towards the center of the planet, and with all of the data that you want to see, the columns go on and on and on halfway across the Atlantic, depends which way around we are. I don't know where east and west is, to be honest. But anyway, you get a huge array of numbers, right? And this list of prices that we cunningly called a price list is just one example of something the system does to help you drive scale, right? By managing how it creates the price, rather than each and every individual price. So tell us a little bit about how this works for you.
Olivier Nocher: Yeah, that's correct. I mean, it sounds like something so simple, but once again, if you remember that so many of us had at least multiple spreadsheets to deal with to just manage the catalog of price, well, we don't have that at all anymore. Everything is in one place, and I could just stop there and say, that's good enough. That's most of my problems sorted out. But if we expand a little bit, the other thing that we really like and you can see it on that particular screen, but we have upended a lot of data to each of those price points. So for example, if you were to look at our systems, you would see that for every single price points, we've got the price of our competitors, if they are available, who our competitors are, how far they are, we'd have information about the local market.
Olivier Nocher: And so we've got a lot of data that is all put in one, quite frankly, nice place. So the reason why it's important to have all that in one place is that then we can use some of the logic that is built in within the product. And those are called, if you haven't used them yet, pricing method, as I think the simplest way of thinking about it, it's either a way of doing calculations the same way you would do in Excel, or some very complicated algorithmic optimization. So as an example, now we've got a pricing method that pulls all our Gen 4 optimization directly into the system. So that was a huge, huge deal for us to just do that.
Dominic O’Regan: Fantastic.
Olivier Nocher I would say something else though, the advantage is that, that database is connected to all our channels, so when the price change there, automatically our sales people have latest price through CPQ, and our website is also automatically updated. And we are hoping very soon we will do also... We will also publish our prices through our chatbot. So all from one place.
Dominic O’Regan: Scale, right? Scale. So the next one is efficiency, and this is the cutest bit of the pricing system, right? Bear with me. So the concept is leader follower, right? But don't call it leader follower, that's boring. This is mother duck pricing, right? So you price the mother duck, set it off across the pond and all the little ducklings follow, price themselves, right? Mother duck pricing. So how have you used mother duck pricing?
Olivier Nocher: Yeah. So I need to clearly rebrand some things internally to talk about mother duck pricing, but that's literally it. And that's... The way it came about was actually quite an interesting story. We didn't realize we had a need for mother duck pricing, well, until after the full implementation of a project. So everything was implemented. We had rolled out an error and everything, and we realized that actually some of our product had very strong similarities, and therefore it'll make sense to link the prices with each other. And we noticed that there was quite a lot of them.
Olivier Nocher: And once again, if you remember, we've got a small team, so any kind of efficiency we can find, we would go for it. So we gave a call to our best friends at PROS, and I say, "All right, do you guys have anything that could help us?" And the answer was, yeah, we've got leader follower, we're not gonna go with mother duck. We've got the leader follower. And actually it was very easy. It's very easy to set up. It's just like a few switches, then a bit of configuration. Then the bulk of the work was actually for us to link things as you can imagine. So now we've got thousands of prices which are already linked in that way, and we definitely plan to carry on adding to that.
Dominic O’Regan: Fantastic.
Olivier Nocher: So very helpful.
Dominic O’Regan: So scale, efficiency. Now governance. Another word for governance is control, which was the name we might have used for this part of our system at some point in the past. Why? Because we want to let you have control of your prices and control of your pricing processes, right? So governance, and we've chosen a part of the approval process. We could have chosen anything, audit trails, all sorts of things, but this is where the pricing team have made loads of decisions, they've done some great stuff or some crazy stuff, and it's come to you to decide, yes, this is okay, this looks good, I'm happy with it. So how does this system give you the information so that you really do have that governance?
Olivier Nocher: Yeah. So I will tackle that and then I'll go back to something else before. So the way it works is that, so my team would come up with their price recommendations and we made sure that we've got the controls within the system so that they cannot just change the price and publish them like that. So there has to be a degree of approval. So I'm not the only person who can approve, there are different rules depending on the levels of approval. So what is very handy is that as a leader in the pricing team in Spire, I know that our prices are not changing in a dangerous way without my knowledge, or without the knowledge of our Chief Commercial Officer. And simply because it's all systemized. So the way it works is that my team is fully able to change the prices and it automatically creates a workflows that then triggers an alert for me. And it goes to a screen like that, and you price, you review it.
Olivier Nocher: You can see what the impact of the change is. You can see for every single price point, what was the price before, after, when it is going to change, and the impact, and then make a decision whether you want to approve or not. Now, the kicker here is that, so my team can change the price and I can approve. We made sure that I cannot actually myself change the price. So if I go in the system, I can't change anything. We wanted to have that level of control so that either me or whoever replaces me at some point cannot just replace and approve and mess up the entire company. And all that is systemized, so we don't have to worry about it. The thing that I wanted to go back on is that we didn't have any kind of governance once again offline before we started.
Olivier Nocher: Now we have set the governance. So we've got pricing committees and probably things that all of you are familiar. And we have managed by this delegation of approval by those rules to systemize effectively the decisioning that comes from that governance. And so now, we can go back in time, look at every single prices, and know exactly how they evolved, who instigated the price change, what was the price change, when it happened, who approved it. And it's one of those things going out, most of the time, you don't need it up until you really do, and you're really happy when you've got all that backing behind you. So we were very thoughtful about that and we're glad to have a solution.
Dominic O’Regan: Brilliant. So the summary really is a journey of growth, right? In Spire, and the capabilities that we've focused on supporting the scale, helping with the efficiency and putting the governance around the process are really things that have simply supported and helped to enable a significant growth journey for Spire over the last few years, and COVID gave you a big boost, right?
Olivier Nocher: I hope so. We'll see.
Dominic O’Regan: So scale, efficiency, governance and thank you, Olivier, for talking to us today.
Olivier Nocher: Thank you.
Dominic O’Regan: And I think it's time to welcome onto the stage the Highline Warren team, right?
Jorge Garza: Hi, I'm Jorge Garza, Strategic Consultant here at PROS. And with me today, I've got Julia Brasher, Director of Pricing and Revenue Management at Highline Warren. So Julia, why don't you tell us a little bit about the challenges that you were facing at Highline Warren before you partnered with PROS?
Julia Brasher: Yeah. Thanks Jorge, and good morning. Highline Warren is a manufacturer and distributor for oil, chemicals and just consumable products in the aftermarket auto industry. So we have 20 national manufacturing and distribution sites. We manufacture 200 million gallons of oil annually, and we are a product of acquisitions such that 60% of our revenue now flows through the manufacturing side, 40% of the revenue is through the distribution side. We partnered with PROS to... Yeah, so we had some business challenges, and when I was at Outperform last year, I was actually not a customer yet. So we brought these business challenges to PROS. Through the acquisitions, we became a one company with four ERPs, none of which I would consider an up-to-date ERP.
Julia Brasher: Their green screen AS400 is very old in technology. Especially on the redistributed side, we have thousands of SKUs, so high volume of products, we deal with a lot of vendor cost changes, monthly price changes are the norm. And because of so many ERPs that operated in silos with different SKUs, same customers, different customer numbers, things like that, we lacked the price harmonization that we needed to see just across both channels and all of our brands. And then of course, because we were so siloed and all the ERPs, getting all that data, analyzing it was just a lot of hard labor involved to do that.
Jorge Garza: So thanks Julia. So to solve for these challenges, we built a solution that injected AI directly into Highline Warren's pricing by leveraging PROS price optimization. So these optimized prices were further refined and augmented using intelligent business rules. Now, with this consolidated system in place, PROS became the single source of pricing truth, seamlessly delivering pricing to Highline Warren's existing ERPs and sales team. And by taking this approach, Highline Warren's sales team could continue in using interfaces that they were familiar with, and this ensured a smooth change management process. So as Highline Warren continued to close more business, all of that data, all that transactional information came back into PROS and provided Highline Warren and their pricing team actionable insights into the analytics that help them gain visibility into the effectiveness of their different pricing strategies, margin leakage, and governance.
Jorge Garza: And so lastly, using that data, we fed that right back into the PROS AI price optimization algorithm, and through machine learning, it continued to improve pricing. So this whole new pricing experience gives Highline Warren pricing and their selling teams what they really need to execute on winning pricing. Now, we're gonna take a closer look at all of these different pieces. Now, when it comes to price optimization, visibility and transparency is absolutely critical. And so PROS price optimization gives Julia and her pricing team a comprehensive overview and breakdown of the revenue and margin uplift that they could potentially derive from their existing transactional data, which is what you see here. And so this is the UI that the Highline Warren pricing team would use to get a better view or better visibility into the direction and magnitude of the price changes that PROS AI is recommending.
Jorge Garza: Now we're gonna get more granular here, and what we're seeing here is that the PROS price optimization provides detailed insights into individual pricing recommendations. So here you can see the floor, the target and expert prices, as well as the win rate elasticity curve for every single unique transaction. Now, this is gonna give Highline Warren and their pricing team visibility into how each of these tailored prices and the recommendations are generated all through the same UI. Now, not only does PROS price optimization provide what that pricing envelope looks like, it also precisely breaks down how different and discrete product, customer and transactional attributes are going to influence price recommendations and that willingness to pay. So starting on the left here, you see a baseline price, and then as you move to the right, you can see the influence each attribute will have on that final pricing.
Jorge Garza: And since PROS doesn't use segmentation for this algorithm, every single transaction is going to have its own unique set of attributes that influence that price. The AI that's the backbone of the solution is smart enough to see all of that nuance throughout Highline Warren's entire data set. Now, pricing doesn't exist in a vacuum. So PROS price optimization will give the context to the price recommendation by showing what other customers have paid for the same product under similar circumstances. Now, this is gonna give Julia and her team the confidence that they need that these recommendations are aligned across their entire business. Now, everything that I just showed you is what Julia and her pricing team will use to get that visibility and transparency into how the AI is working and how it's processing the pricing. All of that information is distilled into a pricing envelope that is seamlessly integrated into Highline Warren's existing ERPs, as you see here, as shown in the yellow on the bottom.
Jorge Garza: And so what happens is Highline Warren's sellers now have a familiar tool that they're working with, and they've got this intelligence being fed into it, and now they can go and outperform. So as Highline Warren continues to gain and win more business, all of that data is fed right back into PROS, giving them the key insights into their optimization performance. So what this view is showing here is how the Highline Warren pricing team or selling team is tracking to those recommendations. So down at the bottom, you see the blue, and that's showing you where the over-discounting is taking place so you can take action on those situations. The yellow section is showing you where pricing is being recommended around floor and target and transacted on, you've got the purple showing you transactions that are between floor and expert pricing. And then finally, or just showing you all of that above expert pricing. So using this information, the Highline Warren team is equipped with actionable insights into the performance of that AI driven pricing solution.
Jorge Garza: Now, what's really cool is that the PROS platform also gives Highline Warren cross-functional support across their entire organization, and it gives them a better picture of that gross to net pricing using this price waterfall. So this can show you, for example, where's over-discounting happening, how are you arriving at your current margins? And that way, PROS breaks this information down into a way that's digestible and usable by different functions such as your finance teams, CFOs, they have all that information that they need to make better informed pricing decisions. And lastly, PROS provides insights into period over period margin driver performance. So this is allowing the pricing team to really hone in on what's driving that margin leakage. So Highline Warren has what they need to be proactive with their pricing decisions, all the way from the most granular detail, all the way up to the most comprehensive view. And so Julia, what kind of impact did PROS have on Highline Warren when you partnered with us?
Julia Brasher: Yeah, it's been a great, powerful impact. We've been live since February and we've already seen some dramatic changes within the business. We do have Gen 4. So we have the AI-driven pricing, which our sellers have adopted. The pricing team was skeptical at first and we did a proof of pricing project where we researched prices that were coming from guidance against our year-over-year average sale prices, looking at customer product specific analysis to be fair to the guy guidance and also looking at competitive market data and just seeing, just trying to predict, okay, are the sellers gonna adopt this? Are they gonna have buy-in with this? We have improved price execution. So did they have buy-in? They did.
Julia Brasher: We brought them along side by side. I started with six sellers who I just partnered with and checked in regularly, took their feedback, listened to it, made action, and they really became the advocates for the rest of our sellers to come into PROS and adopt the guidance. We had a seamless integration. You saw the screen grab of what our order entry looks like but I do have to say that that seamless integration, I had very low expectations that it was gonna go well. And I really have to credit the PROS team for not only the hard work that they did, but the advice they provided, the guidance they provided to ensure we were making the right decisions from a technology standpoint so that hopefully in the future, when we do improve our ERP, we can just plug and go and not miss a beat when it comes to pricing execution.
Julia Brasher: It's been an enhanced pricing governance. We still allow overrides as we have a lot of transactional data. The sellers move very quickly through a lot of rows of data and we do allow handkey overrides. But what we're seeing is that as time progresses and they stay and keep using Gen 4, they're really sticking to that target price and they're adopting it. And they are also complemented because they'll say that, "Yeah, target was what I thought it would be," you know? "The pricing team has finally done something right." And so we've had some great feedback from them thanks to the PROS. And lastly, just the margin insight.
Julia Brasher: You know, we're still really new into the implementation, so I'm not gonna... It would be unfair to say that we're actively using all of those graphs that Jorge just showed, but we do... We access them, we look at them. We know... We're still trying to understand them and make sure that, you know, who gets these, what are we gonna do with these, but we do have some great margin KPIs that we're already showing the sales managers so that they can see which sellers have really adopted it, where does it really work in certain product categories. And so it's really exciting to see where we were last year at Outperform and where we are this year. So thank you, Jorge.
Jorge Garza: Yep. And thank you, Julia, for sharing that story with us. And I wanna thank Highline Warren and your team for partnering with PROS and letting us tackle those challenges for you. So up next, let's welcome Crescent Electric Supply Company to the stage.
Heather Richey: Hi everyone, I'm Heather Richey. I'm a Senior Consultant here at PROS and I am so excited to introduce you to someone who's kind of a big deal in the pricing world because he's literally Mr. Price. Give it up for Chris Price from Crescent Electric.
[applause]
Chris Price: All right, thank you, Heather, and that is the first time I've heard that joke today. So anyway, yeah, my name is Chris Price. I work for Crescent Electric Supply and I'm honored to be on the stage and share with you some details and information about our company and how we've used PROS to implement a solution and help us get past some obstacles. So I just wanted to... One thing real quick. I am from Wyoming. Has anyone ever been to or through Wyoming?
Heather Richey: That's a good amount.
Chris Price: All right. Anyone from Wyoming? I'm the only one here? Okay, just checking so that we can get on the same plane together. Okay. Anyway, yep, so Crescent Electric, a little bit about them. We're a leader in the electrical distribution industry and have been since 1919, so about 105 years. And our priority is meeting the ever-evolving needs of our customers across the country, making it easier and more convenient for us to do business with them. We have 156 locations across seven child companies in 28 states, and it's still owned by the same original family. So some of our business challenges that we've come across that have driven the need for automated pricing, we have pricing based on stagnant data and gut feelings.
Chris Price: And if I've seen a common trend this week, that's kind of been the common denominator among everybody here. I think we can all relate to that. It's led to a lot of manual pricing practices and overrides and I think everyone here can attest to that. Decisions made on feelings or guesses, often using guessed margin percentages instead of data and market intelligence. There's been minimal data analysis via Excel and other platforms which has led to the creation and management of over 700,000 matrix records in our ERP, what I like to call paralysis by analysis. And there's been way too much variance between our branches in pricing because before we had PROS implemented, every branch was decentralized in pricing and could control their own pricing.
Chris Price: So pricing needed to be more aligned between our markets and regional locations and then we also had some broken accountability in our pricing practices, and so really driving the need for automated pricing. The business impact from our competitors is that they're also doing the same thing and so we have to keep up or we're just gonna get left in the dust. So we had to make a change. Our customers expectations are always changing in real time but our pricing model was not. So we had to do something. Customers are always expecting more real-time information and provided more efficiently and we needed to be able to differentiate Crescent through our value-added services and provide with real-time data-driven analytics. Using Pros's software gave us a chance to prevent stagnant data and margin erosion, something we weren't looking for in the past.
Chris Price: We've had difficulty, just like everyone else here who was mentioned that we've talked to and heard from, we had difficulty selling the changes to the sales team. You know, change is hard. People are prone to resist change and we all have the guys that have been there 20, 30 year veterans that think their way is better. So we've struggled to convince sales field pricing should be centralized and the branches had simple and limited calculations before and they were not optimizing or protecting their profit margins. So the reaction or the approach was always reactive rather than proactive and we see a lot of resistance in knee jerk reactions.
Chris Price: The DC model, our distribution center model, was being planned out and we needed to consider alternatives. So our goals had exceeded our previous solutions capabilities as well. We tried doing homegrown solutions to overcome our obstacles, and we tried other software that once pricing was centralized. But the solutions were always too simple and Crescent quickly outgrew each one. So, PROS, enter in, was able to identify each of these problems and help us generate solutions that we were able to implement. And we went live about three years ago, almost three years ago.
Heather Richey: Yeah, I'm sure a lot of the things that Chris just brought up are really familiar to everyone, either you've heard today or this week in the sessions or just from your own experience. But like Chris mentioned, it can be really difficult and time consuming to determine what the price should be, especially if you're in an industry where commodity data is really important in determining price. It's constantly changing. And so through the PROS platform, we are really able to pull in that data to automatically feed in the PROS system to then use PROS price optimization to generate the right price. And then we were able to, instead of spending, or Chris, instead of spending time determining what the price should be and then determining what the price should be now because copper has changed.
Heather Richey: Instead, that's automatically done by PROS and he and his team can spend time focusing on things like analytics or determining what decisions they need to make based on the outputs from PROS. But you can have the best pricing, best pricing solution, but really it's so crucial that you have sales adoption. It's so crucial that we're gonna show a slide twice. So here you can see the same thing that Jorge just talked through, but it's your sales team and how they are actually selling against the recommendation from PROS. Looking at this chart here, you can see for the most part that the sales team is pricing above the floor, except for Doug over here who has a lot more sales below floor than the rest of his team. If we just stopped our analytics here, we know we need to talk to Doug, but we don't really know what else we need to talk to him about.
Heather Richey: So through the PROS analytics, we can have connected charts that allow you to dive deeper into the actual root cause of an issue. So if we look into Doug, we can see that he was doing a pretty good job at the beginning of last year. He was selling mostly above the floor, but then when it got to July, something happened. So we've already been able to narrow down that it's starting in July is where the issue occurred. But then if we dive again a little bit deeper, we can actually see the exact sales that occurred during that time. So now we can go talk to Doug. We know what timeframe to talk to him about, and we know exactly which accounts we need to look into so that we can actually have more of a mentoring and coaching conversation with him to increase his sales and ultimately increase revenue. So Chris, could you say a little bit more about how Crescent Electric, or how you helped Crescent Electric sales team with adoption?
Chris Price: Yeah, absolutely. So we have the Smart Price Optimization and Management tools, or SPOM as it's called now. And when we did it, it was called Guidance and Control. So I still call it that sometimes. But one way we were trying to get, you know, just circumvent the obstacle of selling this to our sales team is, anytime a price would come up and they felt that it was too high or not right, PROS is able to, you know, we give them all of our data every day and based on our own transactions they're able to generate a solution for growing sales, including margin uptick. And that gave us a real chance to tell the sales team, you know, we've got our own data, so really if you can trust yourself on these sales, you should be able to trust the price too. So that's kind of been one of our main selling points. And our adoption has, we've seen significant increase in that.
Heather Richey: I love that quote. All right, so now that Crescent Electric has managed their prices, optimized those prices, and now that they've got the sales team on board, that doesn't mean that they're done growing with PROS. Through the PROS self-service platform, they're actually able to make changes and are making changes to their solution. So as their business needs grow and change, the PROS solution that they have can actually grow and change along with them.
Chris Price: All right, so I'll tell you some of the business impacts that we've had since implementing PROS and they are a cloud-based machine learning platform. So we've been able to see margin gains through their data-driven recommendations. It's provided a mindset change for our staff and it's driven the collaboration between our team and our sales team and across our entire company. PROS is able to provide data-driven answers to help overcome the fear of losing an order using system price and PROS using their AI-based algorithms to formulate customer buying patterns and look for areas of margin uptick and optimize those profits. We've been able to instill pricing accountability across our entire company from the top down through the use of an approval process.
Chris Price: They've been able to help us remove the guesswork that takes place, and we're able to distinguish the difference between normal day-to-day prices and how to price out special job quotes using our own historical data. And like she was mentioning before, we have KPIs and insights on our field override frequency and trends, and it provides opportunities to discuss with the field to understand why they might have deviated from a system price. And I don't wanna scare anybody who's in sales, especially in our own company, but we're not watching for that. We're not trying to pick on anybody, but the whole point is to get that feedback and just say, you know, we have data to prove why we should sell at a certain point. What market intelligence are you gathering that you can provide to us that we can use to collaborate and figure out what's going wrong or if there is something wrong?
Chris Price: And so we push back on them a lot, but it's a collaborative effort and we get along real well. They've helped us with reduced manual intervention and it's provided the pricing team, like Heather said before, more time to complete other tasks and not just be analyzing things in Excel all day. So, and as analysts, that's extremely important because it just becomes cumbersome. We've had an increased focus on our high-value tasks, which is probably our biggest key takeaway. When PROS is able to help us provide real-time pricing recommendations using all of our own data, it's all automated, it's very helpful. And it's based on products, customer types, customer classifications, price sensitivity, et cetera. And so pricing optimization provided a guidance support to differentiate between our market locations, urban and rural, and anything else that we want to configure it to do.
Chris Price: We're able to use their guidance tool to visualize results prior to implementing them into the marketplace, and we can show the risks and rewards of the potential impacts that that would have, which is huge. So we get to see what it would look like before we put it out there. And then how do we want that to look? Where do we want to put it in? So real-time data is such a game changer. And it can be set for automation as often as we want or as often as necessary, monthly, weekly, daily, intraday. And it's instilled confidence in the pricing into our sales team. We've seen margin improvement and the ability to review pricing requests or feedback from the field so that anything that is beyond what is provided through the AI, we can actually consider that as well. So it's a simplified reporting process and they've given us full hands-on control using the Smart Price Optimization tools.
Chris Price: We can actually change levers and we can configure it how we want. We don't always have to write into the support team. And speaking of the support team, I will say that their support team and everybody at PROS has been so great to work with, and I really, really do feel like they want us to succeed. Everybody I deal with on the PROS team has been amazing and very supportive, and they're always there having an ear. And they really, I don't think they're, you know, just blowing smoke. I think they do a really nice job for us, and I think they would for you, too. So, anyway, and I'll end with that, but as we always say at the end of every meeting or communication, onward and upward.
Heather Richey: I didn't know you were gonna say that last part, that was so nice. So I just wanted to take a minute to thank Chris and Crescent Electric for sharing their story with us today, let's give them a round of applause and let's just keep it going for all the amazing customers who spoke today, Fonterra, no let's keep it going, Fonterra, Spire Healthcare, Highline Warren, and Crescent Electric. Thanks.